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US board may delay sweeping accounting rule change for revenue
[NEW YORK] The board that sets accounting rules for US public companies proposed on Wednesday a one-year delay in sweeping new rules that would change the way companies recognise revenue, one of the most important numbers in corporate financial statements.
The revised timeline from the US Financial Accounting Standards Board (FASB) calls for the rules to take effect for public companies starting in 2018 and for nonpublic companies in 2019.
FASB spokeswoman Christine Klimek said the board proposed the delay to give companies more time to prepare for the rules. Some companies that need new systems to implement the rules do not yet have necessary software, she said.
FASB said it would seek public comments for 30 days before deciding on the timeline.
The new standard for revenue recognition was approved in May 2014 as part of an effort to align US accounting rules, called Generally Accepted Accounting Principles, with international rules known as International Financial Reporting Standards.
For US companies, the rule change would replace an array of industry-specific guidance with a single principle for recognising revenue across various industries. Generally, revenue will be recognised when a company transfers control of goods or services.
The accounting change calls for more judgment on the part of managers of US companies in recognising revenue, while international companies that currently lack detailed rules on when revenue should be booked would have more guidance.
Rule-makers had worked for years to align the US and international standards so that investors could more easily compare financial results from companies in all parts of the world.
Accounting experts had said the rule change would present a logistical challenge for companies. The change calls for extensive disclosures and requires many businesses to change their book-keeping practices and technology systems.
A spokesman for the International Accounting Standards Board, which sets the international standards, was not immediately available for comment.